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Milwaukee 261 sold, will continue operating

Published: May 8, 2010
MINNEAPOLIS - The longtime operator of Milwaukee Road 4-8-4 steam locomotive No. 261 will buy the engine for $225,000 and continue operating it in excursion service. The deal, announced today, ends a long-standing feud between the engine's owner and operator that nearly saw it returned to static display.

The National Railroad Museum in Green Bay, Wis., owns the engine, but has leased it to the Minneapolis-based Friends of the 261 since 1995. The two sides have been at loggerheads over a lease price going forward, and the engine hasn't operated since 2008.

No. 261 is a 1944 Alco product, and ran for the Milwaukee Road for 10 years. The railroad donated the engine to the museum in 1956. In 1992, a for-profit corporation, North Star Rail Inc., leased the engine from the museum and restored it to operation the following year. North Star dropped out in 1995, and the nonprofit friends group took over. From 1993 to 2008, Milwaukee 261 was a stalwart of steam, running at least one trip each year, a record unmatched by any other mainline steam engine. It pulled excursions until September 2008, when it came due for its federally mandated inspection and overhaul. That's when the rent dispute engulfed the engine.

Last fall, the museum put No. 261 up for sale through broker Sterling Rail for $225,000. It found a taker in a California businessman who hoped to buy the engine and have the friends overhaul and operate it. That deal fell through this March, and the museum then contacted Steve Sandberg, the friends' chief operating officer, offering to sell it. This week, a purchase agreement was signed and the sale went forward.

In a TRAINS interview, Sandberg describes the sale as a winner for both sides. "We're pleased that we were able to purchase 261 and that it can now be overhauled," he said. "While it was not originally our intention to buy the locomotive, after the museum offered it to us, we decided that was the only option if 261 was to run again," he said.

While Sandberg's group now owns the engine, hurdles remain. The group had to use much of the cash it had originally earmarked to restore 261 on the purchase, which means it now doesn't have enough money on hand to complete the rebuild. Sandberg said that while crews will resume work on the 261's rebuild immediately, the group would also concentrate on fundraising.

"Through the years of negotiations, many people came to me and said, 'If you ever buy the engine, let me know and I'll make a donation.' Well, now I'm asking those people and anyone else who will listen that we need their help if 261 is to run again."

Museum Operations Manager Bob Lettenberger said money the museum is raising through the sale will go toward restoration of rolling stock displayed there. Bob Young, the museum's acting executive director, said he's pleased the engine will continue to operate as part of the agreement.

Donations can be sent to Railroading Heritage of Midwest America, friends affiliate, at 4322 Lakepoint Court, Shoreview, MN 55126 or by visiting www.261.com. - Steve Glischinski
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